Bangkok offices still a bargain
Thai capital ranked 86th on global office occupancy cost table, CBRE survey shows
published : 13 Sep 2019 at 04:01
newspaper section: Business
Bangkok continues to offer good value to office occupants, ranking 86th out of 122 cities worldwide for the most expensive prime office rents at 1,208 baht per square metre, according to the latest CBRE Global Prime Office Occupancy Costs report. The city also ranked 46th in terms of biggest annual increase.
Office occupants continue to seek higher quality space in markets with robust infrastructure and social amenities, despite weaker global economic growth and worries about the US-China trade war. The race to attract talent by securing the most desirable work environments remains intense. Due to the limited supply of existing and planned space in most cities, prime office rents have risen to new heights.
These increases persist even as space efficiency and cost management are top concerns for many tenants. The continuing challenge is how to secure quality space and location that meet the increasingly exacting demands of the workforce, while also controlling costs. In this context, measuring superior productivity and the user experience of such space becomes more important.
Bangkok is following this global trend. A handful of the best grade A buildings in the central business district (CBD) are achieving rents significantly higher than the average. These buildings are not just in prime locations, but are also technically better than their competitors in terms of air conditioning, lifts, energy efficiency and several other factors.
The highest rents achieved in Bangkok are in Gaysorn Tower at 1,500 baht per sq m per month; Park Ventures (1,300 baht) and Bhiraj Tower at EmQuartier (1,250 baht). The average CBD grade A rent is 1,040 baht per sq m per month for a small unit.
(CBRE defines prime office occupancy costs as the cost -- rent, local taxes and service charges -- to occupy the highest quality office space in each market's highest quality location.)
A bird's eye view of Park Ventures Ecoplex, a grade A office in the central business district with costly monthly rental rates.
The rate of increase in Bangkok has slowed over the last 12 months and is below the five-year average. There will be a limited amount of new supply up to 2021, but after that, new supply will exceed historic levels of growth in demand. Many of the new buildings will be of a very high standard in terms of design, specifications and amenities.
For many tenants, there is an incentive to upgrade as they move to agile workplaces where there are no fixed desks. Population densities will be greater, so buildings need better lifts and air-conditioning systems. Employees also want better amenities and facilities and, if companies want the best talent, they will have to have the best office environment.
The unanswered questions are how many office tenants will be willing to pay a premium rent that is higher than the average grade A rent for a better quality building, and how big will that premium will be.
To read the full report, visit https://bit.ly/2LMBemy